Chinese probe hits Yum profits

Liza Lin Shanghai

The impact of a government probe into Yum! Brands’ former chicken suppliers in China was growing as a food safety scandal hurt demand, the owner of the KFC and Pizza Hut fast-food chains said in a statement on Monday.

Profit excluding certain items would decline this year, against a previous estimate for growth of 10 percent, the company said. Yum, which got more than half its total sales from China last year, said negative publicity from the scandal would continue to weigh on sales in the first quarter.

Yum’s same-store sales fell in China last quarter after Shanghai’s food safety commission said in December that tests found excessive levels of antibiotics in some of its chicken samples between 2010 and 2011. It joins foreign firms from Toyota to Fonterra Co-operative Group in being challenged by China’s renewed efforts to improve consumer protection. – Bloomberg

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